Global combined heat & power (CHP) installation market was valued at USD 6.25 billion in 2014. The shift in preference towards generating energy from single fuel by replacing conventional separate heat and power system (SHP) is expected to drive the market over the seven years.
Increasing energy demand in industrial and commercial sector is expected to fuel the demand. It is a clean approach to generate electricity and thermal energy from single fuel cell. This process can reduce the dependency of purchasing electricity from local utility and then burning fuel in a boiler or on-site furnace.
North America combined heat & power (CHP) installation market by product, 2012-2022, (GW)
Stringent government regulation to curb CO2 gases into the environment is expected to drive demand over the forecast period. The 2008/EC directive by European Commission (EC) in the year 2004 was developed to promote cogeneration systems and reduce the greenhouse gases (GNG). Governments in various regions are also providing financial incentive schemes to promote CHP usage.
Abundant natural gas supply coupled with low pricing is expected to influence the market positively. Natural gas is widely used fuel for CHP systems as it is available abundantly in Russia, Qatar, Iran, and the U.S. Natural gas based systems are also cost-effective and are easy to install compared to other fuel systems.
High initial investment cost is expected to hinder market growth. Due to their complex technology, these systems are costly to install for small & medium size institutions and prove beneficial to large industries. Increasing application scope in residential and commercial sectors is expected to provide opportunities for industry participant’s growth over the forecast period.
Large scale and micro & small scale are two basic prototypes of CHP systems. Large scale prototypes accounted for over USD 6 billion in 2014. This product finds its major application in industrial and commercial sectors.
Micro & small scale systems accounted for over 15% in 2014 and are expected to witness significant growth rates of over 8% from 2015 to 2022. Increase in clean energy demand from residential sectors is expected to drive market growth.
Natural gas based CHP systems amounted for over USD 5 billion in 2014. Natural gas is a clean source of energy available and hence it is widely preferred in these systems to generate energy.
Coal based systems accounted for more than 15% of the total volume in 2014 and is expected to witness less than average growth rate over the forecast period. Biomass, a clean source of energy, is expected to witness significant growth rates at an estimated CAGR of over 5% from 2015 to 2022. Other fuel types include wood, waste heat and oil.
Combined cycle system was the dominant technology in 2014 with a market valuation of over 6 billion. These systems are used for application where energy requirement is high particularly for industrial sectors such as chemicals, refining, pulp, paper, sugar, cement, and pharmaceuticals.
Steam turbine based technology accounted for over 30% of the total volume in 2014 and is expected to exhibit moderate growth rates over the forecast period.
Reciprocating engine based technology amounted for over USD 750 million in 2014 and is expected to witness higher growth rates with an estimated CAGR of over 7% from 2015 to 2022. Other technologies used in the market include combustion/gas turbine, waste heat recovery, fuel cell and microturbine.
Industrial sector was the largest application segment for these systems with a market valuation of over USD 6 billion in 2014. These systems are widely used in industries such as petrochemicals and pharmaceuticals. Industrial CHP systems generate electricity and also capture heat that is otherwise treated as waste.
Industrial systems also have benefited by having this system setup of generating thermal energy which can be used a utility for heating or it can be converted to electricity. This thermal energy can also be converted to cooling when it is connected to an adsorption chiller and thus taking advantage of low-cost fuels.
Commercial sector accounted for over 10% of the total volume in 2014 and is expected to witness above average growth rates of over 4% from 2015 to 2022. Residential sector is expected to witness significant growth rates of over 4% from 2015 to 2022.
Europe was the leading regional market for CHP systems demand with a market valuation of over USD 4 billion in 2014. Stringent environment regulation to curb pollution levels is expected to drive this regions demand. North America is expected to witness moderate growth rates of a CAGR of over 3.5% from 2015 to 2022.
Asia Pacific accounted for over 25% in 2014 and is expected to witness significant growth rates with an estimated CAGR of over 4.5% from 2015 to 2022. Presence of large scale manufactures in Asia Pacific countries of China, India, Japan and South Korea is expected to drive this region’s demand.
Global CHP industry is moderately consolidated. Key industry participants operating in the regional market include General Electric Energy, E.ON Group, Mitsubishi Power Systems Americas Inc. and Siemens Energy. Other prominent players include Bdr Thermea Group, Clearedge Power, Aegis Energy Services Inc., Infinia Corporation, Dantherm Power, Elite Energy Systems LLC, Ener-G Group, Alstom, and Caterpillar.
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